Notice of Annual Meeting of Stockholders and 2018 Proxy Statement

Transcription

1 Notice of Annual Meeting of Stockholders and 2018 Proxy Statement May 24, 2018

2

3 Evertec, Inc. Road 176, Km. 1.3 San Juan, Puerto Rico April 9, 2018 Dear Stockholder: On behalf of the Board of Directors and officers of Evertec, Inc., we are pleased to invite you to attend our 2018 Annual Meeting of Stockholders to be held at the Condado Vanderbilt Hotel Dorado Room, 1055 Ashford Avenue, San Juan, Puerto Rico 00907, on Thursday, May 24, 2018 at 9:00 a.m. Atlantic Standard Time (the Annual Meeting ). At the Annual Meeting, you will be asked to vote on three proposals described in detail in the accompanying notice of the Annual Meeting and Proxy Statement. The Proxy Statement also contains other information that you should read and consider before voting. Your vote is very important to us. Whether or not you expect to attend the Annual Meeting in person, please submit your proxy or voting instructions over the Internet, the telephone, or by mail as soon as possible to ensure that your shares are represented at the Annual Meeting and your vote is properly recorded. If you decide to attend the Annual Meeting, you will be able to vote in person, even of you previously submitted your proxy. If you have any questions concerning the Annual Meeting, and you are the shareholder of record of your shares, please contact our Investor Relations department at or (787) If your shares are held by a broker or other nominee, please contact your broker or other nominee for questions concerning the Annual Meeting. We look forward to seeing you at the Annual Meeting and appreciate your continued support. Sincerely, Frank G. D Angelo Chairman of the Board of Directors Morgan M. Schuessler, Jr. President and Chief Executive Officer

4

5 Evertec, Inc. Road 176, Km. 1.3 San Juan, Puerto Rico NOTICE OF THE 2018 ANNUAL MEETING OF STOCKHOLDERS DATE AND TIME PLACE ITEMS OF BUSINESS Thursday, May 24, 2018 at 9:00 a.m. Atlantic Standard Time Condado Vanderbilt Hotel Dorado Room 1055 Ashford Avenue San Juan, Puerto Rico To address the following proposals: 1. Election of the directors named in the Proxy Statement; 2. Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm; and 3. Advisory vote on executive compensation; RECORD DATE Stockholders may also transact any other business that may be properly brought before the Annual Meeting or any adjournments or postponements thereof. Close of business on March 29, 2018 (the Record Date ). Only stockholders of record as of the Record Date are entitled to notice of, and to vote at, Evertec, Inc. s 2018 Annual Meeting of Stockholders or at any adjournments or postponements thereof. Your vote is important to us. Please exercise your stockholder right to vote. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING: The Company s Proxy Statement and Annual Report are available at By Order of the Board of Directors, Luis A. Rodríguez-González General Counsel and Secretary of the Board of Directors April 9, 2018

6

7 Table of Contents PROXY SUMMARY 1 Introduction Annual Meeting of Stockholders 1 Cast Your Vote 1 Voting Proposals 2 Executive Summary 2 PROXY STATEMENT FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS 4 General 4 Record Date and Shares Outstanding 4 Quorum 4 Voting of Proxies 4 Voting of Shares 5 Required Votes / Effect of Abstentions and Broker Non-Votes 5 How You Can Vote 5 Vote in Person 5 Vote by Internet 6 Vote by Telephone 6 Vote by Mail 6 Revocation of Proxies 6 Voting Results 6 Solicitation 7 Householding of Proxy Materials 7 CORPORATE GOVERNANCE 8 Overview 8 Board Composition 8 Board Leadership Structure 8 Board Committees 9 Audit Committee 9 Compensation Committee 9 Nominating and Corporate Governance Committee 9 Information Technology Committee 10 Other Committees 10 Risk Oversight 10 Code of Ethics 11 Meetings of the Board of Directors and Corporate Governance Matters 11 Indemnification of Directors and Officers 12 Procedures for Communications with the Board 12 Director Attendance Policy 13 Section 16(a) Beneficial Ownership Reporting Compliance 13 PROPOSAL 1: ELECTION OF DIRECTORS 14 Overview 14 Director Qualifications 14 Identifying and Evaluating Nominees for Director 14 Stockholder Nominees 14 Recommendation of the Board of Directors 15 Information about Director Nominees 15 PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 20 Overview 20 Report of the Audit Committee 21 Principal Accounting Fees and Services 22 Recommendation of the Board of Directors 22 BIOGRAPHICAL INFORMATION OF OUR EXECUTIVE OFFICERS 23 Executive Officers 23 COMPENSATION DISCUSSION AND ANALYSIS 26 Compensation Committee Report 26 Executive Summary 26 Named Executive Officers (NEOs) 27 Compensation Philosophy and Objectives 27 Role of Executive Officers in Compensation Decisions 28 Competitive Compensation Practices 29 Elements of Compensation 29 Base Salary 30 Annual Cash Bonus 30 Long-Term Equity Incentives 31 Special Retention Grant 34 Other Compensation 34 Tax Deductibility of Executive Compensation 35 Stock Ownership Guidelines 35 Anti-Hedging Policy 36 Compensation Risk Assessment 36 Summary Compensation Table 36 Grants of Plan-Based Awards 38 Outstanding Equity Awards at Fiscal Year End 39 Option Exercises and Stock Vested 40 Pension Benefits and Non-qualified Deferred Compensation 40 Potential Payments upon Change in Control 40 Employment Agreements 40 Evertec, Inc Proxy Statement i

8 Potential Payments upon Termination of Employment 41 Payments upon Termination or a Change in Control 43 CEO Compensation Pay Ratio 44 Director Compensation 44 Compensation Committee Interlocks and Insider Participation 46 PROPOSAL 3: ADVISORY VOTE ON EXECUTIVE COMPENSATION 47 Overview 47 Recommendation of the Board of Directors 47 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 48 Policies for Approval of Related Party Transactions 48 Related Party Transactions 48 Master Services Agreement 48 Technology Agreement 50 ATH Network Participation Agreement 50 ATH Support Agreement 51 Independent Sales Organization Sponsorship and Service Agreement 51 Cash Depot Subcontract 52 Amended Lease 53 Virgin Islands Services Agreement 53 Stockholder Agreement 53 STOCK OWNERSHIP 57 Security Ownership of Certain Beneficial Owners and Management 57 OTHER MATTERS 59 Stockholder Proposals for the Company s 2019 Annual Meeting of Stockholders 59 Other Business 59 ii Evertec, Inc Proxy Statement

9 PROXY SUMMARY Introduction This summary highlights information contained elsewhere in this Proxy Statement, but does not contain all of the information that you should consider before voting your shares. Please read the entire Proxy Statement, our Form 10-K for the year ended on December 31, 2017 and the Company s Annual Report for the fiscal year ended on December 31, 2017 (the Annual Report ) for complete information regarding the 2018 Annual Meeting of Stockholders (the Annual Meeting ), the proposals to be voted on at the Annual Meeting and our performance for the year ended on December 31, Except as otherwise indicated, the terms Evertec, we, us, our Company, and the Company refer to Evertec, Inc. and its subsidiaries on a consolidated basis Annual Meeting of Stockholders Date: Thursday, May 24, 2018 Time: 9:00 a.m. (AST) Location: Condado Vanderbilt Hotel Dorado Room 1055 Ashford Avenue San Juan, Puerto Rico Record Date: March 29, 2018 Cast Your Vote Stockholders as of the Record Date may cast their vote in the following ways: Internet Phone Mail In Person Visit You will need the 16-digit number included in your proxy card or notice. Call You will need the 16-digit number included in your proxy card or notice. Send your completed and signed proxy card to the address on your proxy card. If you plan to vote in person, you will need to bring a photo ID and proof of your ownership of Evertec, Inc. stock as of the Record Date. Evertec, Inc Proxy Statement 1

10 PROXY SUMMARY Voting Proposals Board Recommendation Page Proposal 1: Election of directors Frank G. D Angelo FOR 14 Morgan M. Schuessler, Jr. FOR 15 Olga Botero FOR 15 Jorge A. Junquera FOR 16 Teresita Loubriel FOR 16 Néstor O. Rivera FOR 17 Alan H. Schumacher FOR 17 Brian J. Smith FOR 18 Thomas W. Swidarski FOR 18 Proposal 2: Ratification of the appointment of independent registered public accounting firm FOR 19 Proposal 3: Advisory vote on executive compensation FOR 46 Executive Summary 2017 Performance Highlights 2017 was a challenging year for the Company because of the effects of the catastrophic Hurricanes Irma and Maria, which severely impacted Puerto Rico and the Caribbean during the second half of the year. The Company and its employees demonstrated inspiring commitment and resiliency during and in the aftermath of these hurricanes, which created a difficult operating environment and deeply affected the local economies. Despite these challenges, we believe we displayed strong commitments to our communities, our clients, our employees, and our stockholders during Financially in 2017, the Company s GAAP diluted earnings per common share amounted to $0.76, a decrease of 25% compared with The Company s 2017 Adjusted Earnings per common share 1 amounted to $1.47, a decrease of 12%. Total revenue for 2017 was $407.1 million, an increase of 5% compared with $389.5 million in For the year ended December 31, 2017, Adjusted EBITDA was $178.0 million, a decrease of 5% compared with $187.7 million in the prior year. Other highlights for 2017 include: Closed on the acquisition of PayGroup, a Chilean-based payment processing and software company on July 3, Adjusted Earnings per common share is a supplemental measure of the Evertec s performance, is not required by, or presented in accordance with, accounting principles generally accepted in the United States of America ( GAAP ). It is not a measurement of the Evertec s financial performance under GAAP, and should not be considered as an alternative to total revenue, net income or any other performance measure derived in accordance with GAAP, or as an alternative to cash flows from operating activities, as an indicator of cash flow or as a measure of Evertec s liquidity. In addition to GAAP measures, management uses this non-gaap measure to focus on the factors the company believes are pertinent to the daily management of Evertec s operations and believe it is frequently used by securities analysts, investors and other interested parties to evaluate companies in this industry. We define EBITDA as earnings before interest, taxes, depreciation and amortization and Adjusted EBITDA as EBITDA further adjusted to exclude unusual items and other adjustments. Adjusted EBITDA is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, Adjusted EBITDA, as it relates to our segments, is presented in conformity with Accounting Standards Codification 280, Segment Reporting, and is excluded from the definition of non-gaap financial measures under the Securities and Exchange Commission s Regulation G and Item 10(e) of Regulation S-K. We define Adjusted Net Income as net income adjusted to exclude unusual items and other adjustments described below. We define Adjusted Earnings per common share as Adjusted Net Income divided by diluted shares outstanding. EBITDA, Adjusted EBITDA, and Adjusted Earnings per common share are not measurements of liquidity or financial performance under GAAP. For additional details, refer to our reconciliation of GAAP to non-gaap results provided in the Company s Form 10-K for year ending December 31, Evertec, Inc Proxy Statement

11 PROXY SUMMARY Returned nearly $29 million to stockholders in share repurchase and dividends. Delivered strong operating cash flow in the amount of $146 million. Reorganized our operating segments in the quarter ended December 31, The Company s operating segments are now as follows: (1) Merchant Services, (2) Payment Services (Puerto Rico and the Caribbean), (3) Payment Services (Latin America), and (4) Business Solutions. Executive Compensation Highlights The Company s intent is to ensure that the total compensation paid to our executive officers is fair, reasonable and competitive. Furthermore, Evertec s compensation philosophy has been, and continues to be, to target the market 25th percentile in recognition of the size differentials that exist between Evertec and our peer companies, as well as the challenges in identifying good business matches within desired size parameters. Our compensation program for our NEOs consists of the following core elements: Base salary; Short-term cash incentives based on performance; Long-term equity incentives based on performance and time served; and Other benefits and perquisites. On November 2017, after having consulted with its independent compensation consulting firm, Frederick W. Cook & Co. ( F.W. Cook ), the Company approved special, one-time, compensation measures. The Compensation Committee believed that these actions were critically important and necessary to assist the Company in retaining key individuals in light of the humanitarian disaster caused by the direct hit of Hurricane Maria and its aftermath in Puerto Rico, as well as taking into account the admirable performance of the executives during and immediately after the hurricanes. Special Equity Grant a special one-time retention restricted stock unit grant to all executive officers and certain key employees. For further discussion of the Retention Grant, see Compensation Discussion and Analysis Elements of Compensation Special Retention Grant. Cash Bonus Adjustment performance for the target bonuses was evaluated as of a date prior to the catastrophic effects of Hurricanes Irma and Maria and the results were annualized for purposes of payment of the 2017 cash bonus, subject to a cap of 100% of the original target bonus percentage. For further discussion of the Cash Bonus Adjustment, see Compensation Discussion and Analysis Elements of Compensation Annual Cash Bonus. Evertec, Inc Proxy Statement 3

12 Evertec, Inc. Road 176, Km. 1.3 San Juan, Puerto Rico PROXY STATEMENT FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS General The enclosed Proxy Statement, which was first mailed to stockholders on or about April 9, 2018, is solicited on behalf of the Board of Directors (the Board or Board of Directors ) of Evertec, Inc., a Commonwealth of Puerto Rico corporation, for use at the Company s 2018 Annual Meeting of Stockholders to be held on May 24, 2018 (the Annual Meeting ), and any adjournments or postponements thereof. The Annual Meeting will be held at 9:00 a.m. Atlantic Standard Time, at the Condado Vanderbilt Hotel, Dorado Room, located at 1055 Ashford Avenue, San Juan, Puerto Rico Record Date and Shares Outstanding The close of business on March 29, 2018 has been fixed as the Record Date for determining the stockholders of record entitled to notice of and to vote at the Annual Meeting. At the close of business on the Record Date, there were outstanding and entitled to vote 72,429,141 shares of our common stock, $0.01 par value per share (the Common Stock ). Quorum In order for the Company to conduct the Annual Meeting, the holders of a majority of the outstanding shares of Common Stock eligible to vote at the meeting must be represented in person or by proxy at the Annual Meeting. This is referred to as a quorum. Votes cast in person or by proxy at the Annual Meeting will be received and tabulated by a representative of The Carideo Group, the Inspector of Elections appointed for the Annual Meeting. The Inspector of Elections will determine whether or not a quorum is present. Abstentions and broker non-votes will be counted for purposes of establishing a quorum. A broker non-vote occurs when a brokerage firm returns a signed proxy card but does not vote shares on a particular proposal because the proposal is not a routine matter and the brokerage firm has not received voting instructions from the beneficial owner of the shares. For further discussion of broker non-votes, see Required Votes / Effect of Abstentions and Broker Non-Votes. Voting of Proxies If any stockholder is unable to attend the Annual Meeting, such stockholder may vote by proxy. Shares of Common Stock represented by properly executed proxies, duly returned and not revoked, will be voted in accordance with the instructions contained therein. Except as discussed below with regard to shares held in street name by a bank or broker, if no instruction is indicated on the proxy, the shares of Common Stock represented thereby will be voted as follows: 1. FOR the director nominees for election of directors of the Company listed herein (Proposal 1); 2. FOR the ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for the Company for 2018 (Proposal 2); 4 Evertec, Inc Proxy Statement

13 PROXY STATEMENT FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS 3. FOR the approval through an advisory vote of the compensation paid to the Company s named executive officers (Proposal 3); and 4. At the discretion of the person or persons voting the proxy, with respect to any other matter that may be properly brought before the Annual Meeting. The execution of a proxy will in no way affect a stockholder s right to attend the Annual Meeting and vote in person. Voting of Shares Each share of Common Stock entitles the holder thereof to one vote upon any proposal submitted for a vote at the Annual Meeting. All shares entitled to vote and represented in person or by valid proxies received through the Internet, by telephone or mail will be voted at the Annual Meeting in accordance with the instructions indicated in those proxies. Required Votes / Effect of Abstentions and Broker Non-Votes The vote required for approval of each matter to be voted on is as set forth in the table below. Under certain circumstances, as shown in the table below, banks, brokers or other nominees are prohibited from exercising discretionary authority for beneficial owners who have not provided voting instructions to the bank, broker or other nominee (this is known as a broker non-vote ). In these cases, and in cases where the stockholder abstains from voting on a matter, those shares will be counted for the purpose of determining if a quorum is present, but will not be included as votes cast with respect to those matters. Whether a bank, broker or other nominee has authority to vote its shares on uninstructed matters is determined by the New York Stock Exchange ( NYSE ) rules. The following table sets forth the effect of abstentions and broker non-votes on each proposal to be voted on: Proposal Vote Required Voting Options Election of Directors Ratification of Appointment of Independent Registered Accounting Firm Plurality of votes cast Majority of shares present in person or represented by proxy and entitled to vote FOR or WITHHOLD for any or all nominees FOR, AGAINST or ABSTAIN Effect of Abstentions Broker Discretionary Voting Allowed? Effect of Broker Non-Votes No effect No No effect Treated as a vote AGAINST the proposal Yes Not applicable Advisory Vote on Executive Compensation Matters (Say on Pay) Majority of shares present in person or represented by proxy and entitled to vote FOR, AGAINST or ABSTAIN Treated as a vote AGAINST the proposal No No effect How You Can Vote Vote in Person If you hold shares in your own name, you may vote by proxy or in person at the Annual Meeting. If you wish to vote your shares in person at our Annual Meeting, you may either bring your proxy card or notice of Internet availability of proxy materials (the Notice of Internet Availability ) to the meeting or request a ballot at the meeting. If your shares of Common Stock are held in the name of a bank, broker or other nominee, you will receive instructions from your bank, broker or other nominee that you must follow in order for your shares to be voted. Evertec, Inc Proxy Statement 5

14 PROXY STATEMENT FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS Please follow their instructions carefully. Also, please note that if the holder of record of your shares is a broker, bank or other nominee and you wish to vote in person at the Annual Meeting, you must request a legal proxy from your bank, broker or other nominee that holds your shares evidencing that you were a holder of shares as of the Record Date and present that proxy and proof of identification at the Annual Meeting. To vote by proxy, you may select one of the following options: Vote by Internet You can vote your shares on the Internet until 11:59 p.m. (ET) on May 23, We have made this Proxy Statement and other proxy materials available to our stockholders through the Internet. The website for Internet voting ( is shown on your proxy card or Notice of Internet Availability, as applicable. Internet voting is available 24 hours a day, seven days a week. You will be given the opportunity to confirm that your instructions have been properly recorded. If you vote on the Internet, you do NOT need to return your proxy card, if you received one. You can also vote your shares on the Internet by scanning the QR code shown on your proxy card or Notice of Internet Availability, as applicable, with your mobile device. Vote by Telephone You can vote your shares by telephone until 11:59 p.m. (ET) on May 23, 2018, by calling the toll-free telephone number (at no cost to you) shown on your proxy card or Notice of Internet Availability, as applicable. Telephone voting is available 24 hours a day, seven days a week. Easy-to-follow voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded. Our telephone voting procedures are designed to authenticate the stockholders by using individual control numbers. If you vote by telephone, you do NOT need to return your proxy card if you received one. Vote by Mail If you received your proxy materials by mail, simply mark your proxy card, date and sign it, and return it using the postage-paid envelope provided or return it to the following address: Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY In order for your votes to be included in the final tallies, your proxy card must be received by the date and time of the Annual Meeting. Revocation of Proxies If a proxy is properly executed and returned to the Company in time to be voted at the Annual Meeting, it will be voted as specified in the proxy, unless it is properly revoked prior thereto. If you hold shares of Common Stock in your own name and vote by proxy, you may revoke that proxy at any time before it is voted at the Annual Meeting. You may do this by: (1) signing another proxy card with a later date or a notice of revocation and returning it to us prior to the Annual Meeting (please deliver to the Corporate Secretary of the Company, located at Road 176, Km. 1.3, San Juan, Puerto Rico 00926); (2) voting again by telephone or on the Internet before 11:59 p.m. (ET) on May 23, 2018; or (3) attending the Annual Meeting in person and casting a ballot. If a bank, broker or other nominee holds your shares of Common Stock, you must follow the instructions provided by the bank, broker or other nominee if you wish to change your vote. Voting Results The preliminary voting results will be announced at the Annual Meeting and published within four business days after they are known in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the SEC ). 6 Evertec, Inc Proxy Statement

15 PROXY STATEMENT FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS Solicitation The Company will bear the entire cost of solicitation, including the preparation, assembly, printing and mailing of this Proxy Statement and the Annual Report, and any additional solicitation materials furnished to the stockholders. Nevertheless, stockholders voting by Internet, telephone or mail should be aware that there may be costs associated with electronic access, such as usage charges from Internet or telephone service providers, for which they may be responsible. The original solicitation of proxies may be supplemented by a solicitation by mail, in person, by telephone, or by other electronic means by a proxy solicitor contracted by the Company, whose fees will be paid for by the Company, and directors, officers or employees of the Company, who will not receive any additional compensation for such services. Householding of Proxy Materials The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as householding, provides extra convenience for stockholders and cost savings for us. The Company and some brokers household proxy materials, delivering a single Notice of Internet Availability of Proxy Materials or Proxy Statement and Annual Report to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding or if you are receiving multiple copies of the Proxy Statement and wish to receive only one, please notify your broker if your shares are held in a brokerage account or the Company if you hold Common Stock directly. Requests in writing should be directed to our Corporate Secretary and sent to the following address: Evertec, Inc., Road 176, Km. 1.3, San Juan, Puerto Rico Requests may also be made by calling the Corporate Secretary at (787) ext Evertec, Inc Proxy Statement 7

16 CORPORATE GOVERNANCE Overview The Company s business affairs are conducted under the direction of the Company s Board of Directors in accordance with the Puerto Rico General Corporation Law of 2009, as amended, the Company s charter (the Charter ), and Amended and Restated By-Laws (the By-Laws ). Members of the Board are informed of the Company s business through discussions with management by reviewing materials provided to them and by participating in meetings of the Board and its committees. Board Composition Our Board is currently comprised of nine directors. Mr. Rivera and Ms. Loubriel were nominated to the Board by Popular, Inc. ( Popular ) under its director nominee rights granted by the Stockholder Agreement, by and among the Company, Popular and the other stockholders parties thereto, as amended (the Stockholder Agreement ). Mr. Schuessler has been the management director since April 1, 2015, and shall continue to be the management director for so long as he holds the office of CEO of Evertec Group LLC, our principal operating subsidiary ( Evertec Group ). In accordance with the Stockholder Agreement, if there are any vacancies on our Board, then a committee consisting of our entire Board (other than any directors who are to be replaced because Popular has lost the right to nominate them) has the right to nominate the individuals to fill such vacancies, which nominees must be reasonably acceptable to Popular for so long as it owns, together with its affiliates, at least 5% of our outstanding Common Stock. As of the Record Date, the Board was in compliance with the NYSE rules with respect to maintaining the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee comprised entirely of independent directors. Board Leadership Structure The Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide independent oversight of management. The Board understands that there is no single, generally accepted approach to providing Board leadership, and that the right Board leadership structure may vary as circumstances warrant. Based on its most recent review of the Company s leadership structure, the Board continues to believe that its current leadership structure is optimal for the Company because it provides the Company with strong and consistent leadership. In considering its leadership structure, the Board has taken a number of factors into account. Board and committee processes and procedures, including regular executive sessions of non-management directors and a regular review of the Company s and our executive officers performance, provide substantial independent oversight of our management s performance. The Board has the ability to change its structure, subject to any limitations under the Stockholder Agreement, should that be deemed appropriate and in the best interests of the Company and its stockholders. The Board s current policy, per our Corporate Governance Guidelines, is to maintain the offices of Chairperson of the Board and Chief Executive Officer ( CEO ) separate, subject to any temporary combination of those roles in connection with a CEO transition. Although our Chairman of the Board is an independent director, if in the future a non-independent director serves as Chairperson of the Board, the board will appoint a lead director to serve as the liaison between the Chairperson and the independent and non-employee directors. 8 Evertec, Inc Proxy Statement

17 CORPORATE GOVERNANCE Board Committees The Board has four standing committees, described below: the Audit Committee; the Compensation Committee; the Nominating and Corporate Governance Committee; and the Information Technology Committee. Each of these standing committees is composed entirely of independent directors, except for the Information Technology Committee in which Mr. Rivera is a member. The Stockholder Agreement provides that, unless otherwise prohibited by applicable law, regulation or the NYSE rules (including the independence requirements described above), Popular has the right to representation on each committee of the Board in the same proportion as the number of directors, if any, nominated by Popular out of the total number of directors-for so long as Popular owns, together with its affiliates, at least 5% of our outstanding Common Stock. Audit Committee Our Audit Committee acts pursuant to a written charter (as amended and restated) adopted by the Board, a copy of which is publicly available on the Company s website at in the Investors section under Corporate Information and Governance Documents. Our Board has determined that Messrs. Schumacher, Junquera, Smith and Ms. Loubriel each qualify as an audit committee financial expert, as defined in Regulation S-K of the Securities Exchange Act of 1934, as amended (the Exchange Act ). As indicated above, each of the members of our Audit Committee qualifies as independent, as defined in the Exchange Act and under the NYSE rules. Pursuant to our Audit Committee Charter and our By-Laws, our Audit Committee must consist of at least three board members (including a chairperson) who must meet at least four times a year, including once every fiscal quarter. In compliance with the NYSE rules, the Board made a formal determination that the simultaneous service on more than three audit committees of public companies by Mr. Schumacher does not impair his ability to serve on our Audit Committee nor does it represent or in any way create a conflict of interest for the Company. The Audit Committee assists the Board in its oversight of (i) our financial reporting process, with respect to the integrity of our financial statements and our internal controls over financial reporting; (ii) our independent registered public accounting firm s qualifications, independence and performance; (iii) the performance of our internal audit function; (iv) our management policies regarding risk assessment and management; and (v) our compliance with laws and regulations. The Audit Committee is also responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm and the establishment of procedures for handling complaints. Our Audit Committee met twelve times during Compensation Committee Our Compensation Committee acts pursuant to a written charter (as amended and restated) adopted by the Board, a copy of which is publicly available on the Company s website at in the Investors section under Corporate Information and Governance Documents. As indicated above, each of the members of our Compensation Committee qualifies as independent under the NYSE rules. Pursuant to our Compensation Committee Charter and our By-Laws, our Compensation Committee must consist of at least three board members (including a chairperson) who meet at least once a year, and each member shall be a non-employee director, as defined in the Exchange Act. The Compensation Committee reviews and recommends policy relating to the compensation and benefits of our officers, directors and employees, including reviewing and approving corporate goals and objectives relevant to compensation of the CEO and other senior officers, evaluating the performance of these officers in light of those goals and objectives, and reviewing and approving the compensation of these officers based on such evaluations. The Compensation Committee also produces a report on executive officer compensation as required by the SEC, which is included in this Proxy Statement. Our Compensation Committee met three times during Nominating and Corporate Governance Committee Our Nominating and Corporate Governance Committee acts pursuant to a written charter (as amended and restated) adopted by the Board, a copy of which is publicly available on the Company s website at Evertec, Inc Proxy Statement 9

18 CORPORATE GOVERNANCE in the Investors section under Corporate Information and Governance Documents. As indicated above, each of the members of our Nominating and Corporate Governance Committee qualifies as independent under the NYSE rules. Pursuant to our Nominating and Corporate Governance Committee Charter and our By-Laws, our Nominating and Corporate Governance Committee must consist of at least three board members (including a chairperson) who meet at least once a year. The responsibilities of our Nominating and Corporate Governance Committee include (i) assisting the Board in identifying individuals qualified to serve as members of the Board; (ii) recommending to the Board the director nominees for the next annual meeting of stockholders in each case subject to the terms of the Stockholder Agreement; (iii) reviewing and recommending to the Board a set of corporate governance guidelines; and (iv) leading the Board in its review of the performance of the Board and Board committees. For a further description of our director nomination process under our Stockholder Agreement, see Certain Relationships and Related Transactions Related-Party Transactions Stockholder Agreement Director Nomination Rights. Our Nominating and Corporate Governance Committee met once during Information Technology Committee Our Information Technology Committee acts pursuant to a written charter (as amended and restated) adopted by the Board, a copy of which is publicly available on the Company s website at in the Investors section under Corporate Information and Governance Documents. As indicated above, one of the members of our Information Technology Committee does not qualify as independent under the NYSE rules. The NYSE rules do not require members of other committees such as an Information Technology Committee to comply with the applicable independence requirements. Pursuant to our Information Technology Committee Charter and our By-Laws, our Information Technology Committee must consist of at least three board members (including a chairperson) who meet at least twice a year. The Information Technology Committee assists the Board (i) in the integrity of the Company s information and technology systems; and (ii) in overseeing the Company s IT-related risks, IT security and cybersecurity, and IT infrastructure and strategy. Our Information Technology Committee met four times during Other Committees Our By-Laws provide that our Board may establish one or more additional committees. As of the Record Date, the Board has not established any additional committees besides those described in this Proxy Statement. Risk Oversight The Company has in place an Enterprise Risk Management Policy (the ERM Policy ), the overall purpose and scope of which is the execution of risk management processes that provide for risk and exposure monitoring, the embedding or integration of risk management into all activities as an integral part of the Company s business activities, and the development of comprehensive internal controls and assurance processes linked to key risks. As a result, the Company continuously implements risk management processes that ensure the Company complies with existing regulatory and industry standards, thereby protecting the value of the Evertec brand and reputation by applying a disciplined approach to risk management, governance and internal controls. Our Board is involved in risk oversight through direct decision-making authority with respect to significant matters and the oversight of management by the Board and its committees. Among other areas, the Board is directly involved in overseeing risks related to the Company s overall strategy, including product, go-to-market and sales strategy, executive officer succession, business continuity, crisis preparedness and corporate reputational risks. The committees of the Board execute their oversight responsibility for risk management as follows: The Audit Committee is responsible for overseeing the Company s internal financial and accounting controls, work performed by the Company s independent registered public accounting firm and the 10 Evertec, Inc Proxy Statement

19 CORPORATE GOVERNANCE Company s internal audit function. As part of its oversight function, the Audit Committee regularly discusses with management and the Company s independent registered public accounting firm the Company s major financial and controls-related risk exposures and steps that management has taken to monitor and control such exposures. Within its risk oversight functions, the Audit Committee is responsible for reviewing the overall implementation of the Company s ERM framework and program, ensuring the placement of controls needed to establish a strong internal control environment, receiving periodic status reports on management s ERM progress, overseeing the Company s risk exposure, and validating management s active role in assessing, managing and mitigating risks. In addition, the Company, under the supervision of the Audit Committee, has established procedures available to all employees for the anonymous and confidential submission of complaints or concerns relating to any matter to encourage employees to report questionable activities directly to the Company s senior management and the Audit Committee. The Compensation Committee is responsible for overseeing risks related to the Company s cash and equity-based compensation programs and practices. The Nominating and Corporate Governance Committee is responsible for overseeing risks related to the composition and structure of the Board of Directors and its committees and the Company s corporate governance practices. In this regard, the Nominating and Corporate Governance Committee will periodically review the Board and its committees, and plan for Board member succession and executive officer succession. The Information Technology Committee is responsible for overseeing the Company s information and technology systems related risks and security. Furthermore, a Management Operating Committee (the MOC ) that is comprised of members of senior management (including our CEO, COO, CFO, General Counsel, heads of our business segments and such other officers of the Company as the CEO deems necessary or advisable for the proper conduct of the business of the Company) was created to assist the Audit Committee with risk oversight responsibilities. The MOC delegates risk responsibilities throughout the Company through the Company s Risk Officer, Risk Owners and Risk Working Groups in order to define the Company s risk appetite through a combination of limits and tolerances, and ensure that processes are implemented to identify, measure and assess risks. The ERM Policy requires regular reporting to ensure proper documentation of the Company s ERM activities. The Risk Officer has been delegated the primary responsibility of reporting risk summaries to the Audit Committee, and compiling an annual ERM report. Members of senior management also report information regarding the Company s risk profile directly to the Board from time to time. The Board believes that the work undertaken by the Board, the Board s committees, the MOC and the Company s senior management team enables the Board to effectively oversee the Company s risk management processes. Code of Ethics We have adopted a Code of Ethics that applies to all our directors, officers and employees, including our CEO and CFO. Our Code of Ethics is posted on our website at in the Investors section under Corporate Information and Governance Documents. We intend to include on our website any amendments to, or waivers from, a provision of the Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, or controller that relates to any element of the code of ethics, as defined by the SEC. Meetings of the Board of Directors and Corporate Governance Matters The Board met nine times during The Board s operation and responsibilities are governed by the Charter, the By-Laws, charters for the Board s standing committees, Puerto Rico law and the Stockholder Agreement. The Charter and By-Laws generally eliminate the personal liability of each of our directors for breaches of fiduciary duty as a director and indemnify directors and officers as described below. Evertec, Inc Proxy Statement 11

20 CORPORATE GOVERNANCE Indemnification of Directors and Officers Our Charter and By-Laws limit the liability of our directors to the maximum extent permitted by Puerto Rico law. However, if Puerto Rico law is amended to authorize corporate action further limiting or eliminating the personal liability of directors, then the liability of our directors will be limited or eliminated to the fullest extent permitted by Puerto Rico law, as so amended. Our Charter and By-Laws provide that we will, from time to time, to the fullest extent permitted by law, indemnify our directors and officers against all liabilities and expenses in any suit or proceeding, arising out of their status as an officer or director or their activities in these capacities. We will also indemnify any person who, at our request, is or was serving as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, and is involved in a suit or proceeding arising out of such position. We may, by action of our Board, provide indemnification to our employees and agents within the same scope and effect as the foregoing indemnification of directors and officers. The right to be indemnified includes the right of an officer or a director to be paid expenses, including, without limitation, attorneys fees, in advance of the final disposition of any proceeding, provided that, if required by law, we receive an undertaking to repay such expenses if it is determined that the officer or director is not entitled to be indemnified. Our Board may take certain action it deems necessary to carry out these indemnification provisions, including purchasing insurance policies. Neither the amendment nor the repeal of these indemnification provisions, nor the adoption of any provision of our Charter and By-Laws inconsistent with these indemnification provisions, will eliminate, reduce or adversely affect any rights to indemnification relating to such person s status or any activities prior to such amendment, repeal or adoption. Our By-Laws provide that we may maintain insurance covering certain liabilities of our officers, directors, employees and agents, whether or not we would have the power or would be required under Puerto Rico law to indemnify them against such liabilities. We maintain a directors and officers liability insurance policy ( D&O Liability Insurance ) for the protection of our directors and certain of our officers. We have entered into separate indemnification agreements with each of our directors in connection with his or her appointment to the Board. These indemnification agreements will require us to, among other things, indemnify our directors against liabilities that may arise by reason of their status or service as directors. We believe these provisions will assist in attracting and retaining qualified individuals to serve as directors and officers. These indemnification agreements also require us to advance any expenses incurred by the directors as a result of any proceeding against them as to which they could be indemnified and to use reasonable efforts to cause our directors to be covered by our D&O Liability Insurance policy. A director is not entitled to indemnification by us under such agreements if (i) the director did not act in good faith and in a manner he or she deemed to be reasonable and consistent with, and not opposed to, our best interests; or (ii) with respect to any criminal action or proceeding, the director had reasonable cause to believe his or her conduct was unlawful. To our knowledge, currently there is no pending litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification by us is sought, nor are we aware of any threatened litigation or proceeding that may result in a claim for indemnification. Procedures for Communications With the Board Stockholders and any interested party may communicate directly with the Board. All communications should be directed to our Corporate Secretary at the address below and should prominently indicate on the outside of the envelope that it is intended for the Board of Directors or for non-management directors. If no director is specified, the communication will be forwarded to the entire Board. Communications to the Board should be sent to: Evertec, Inc., Board of Directors, care of the Corporate Secretary, Road 176, Km. 1.3, San Juan, Puerto Rico Evertec, Inc Proxy Statement

21 CORPORATE GOVERNANCE Director Attendance Policy The Company does not have a formal policy with regard to Board member attendance at the Company s annual meetings of stockholders. All directors are encouraged to attend each annual stockholders meeting to provide our stockholders with an opportunity to communicate with directors about issues affecting the Company; however, attendance is not mandatory. Last year, all of our directors standing for re-election at the Company s 2017 Annual Meeting of Stockholders attended the meeting, with the exception of Mr. Smith, who was unable to assist due to personal reasons. As required by the Company s By-Laws, the Board must meet immediately after the Company s annual stockholders meeting. During 2017, none of our directors attended less than 75% of their Board and respective committee meetings. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires that our directors, executive officers, and holders who own more than ten percent of any registered class of the Company s equity securities file with the SEC initial reports of beneficial ownership and report changes in beneficial ownership of Common Stock and other equity securities. Such reports are filed on Form 3, Form 4 and Form 5 under the Exchange Act, as appropriate. Reporting persons holding the Company s stock are required by the Exchange Act to furnish the Company with copies of all Section 16(a) reports they file. To the Company s knowledge, based solely on the Company s review of copies of these reports, and written representations from such reporting persons that no other reports were required, the Company believes that all filings required to be made by reporting persons holding the Company s stock were correctly and timely filed for the fiscal year ended December 31, 2017 in accordance with Section 16A(a), except for: (i) an amended report filed by each of our executive officers reporting the corrected total amount of securities acquired, (ii) one late filing by each of our executive officers, except Mr. Rospigliosi, relating to the reporting of Common Stock withheld by the Company to pay the tax liability of such executive officer in connection with the vesting of restricted stock units granted; and (iii) one late filing by Mr. Steurer related to reporting a grant of restricted stock units. Evertec, Inc Proxy Statement 13

22 PROPOSAL 1: ELECTION OF DIRECTORS Overview The Board currently consists of nine directors, seven of whom our Board has determined are independent. Under the Company s Charter, By-Laws and the Stockholder Agreement, the size of the Board is currently fixed at nine. Director Qualifications. In making its recommendations of nominees to the Board, the Nominating and Corporate Governance Committee identifies candidates who meet the current challenges and needs of the Board. In determining whether it is appropriate to add or remove individuals, the Nominating and Corporate Governance Committee considers issues of judgment, diversity, age, skills, expertise, background, character, and experience. In making such decisions, the Nominating and Corporate Governance Committee considers, among other things, an individual s business experience, industry experience and financial expertise. The Nominating and Corporate Governance Committee also considers the independence, financial literacy and financial expertise standards required by our committees charters and applicable laws, rules and regulations, and the ability of the candidate to devote the time and attention necessary to serve as a director and a committee member. While the Company does not have a formal diversity policy with respect to director nominations, it considers business diversity (including an appropriate combination of business acumen, educational experience, work experience and the other items noted above), as well as traditional diversity concepts such as race and nationality, as two of a number of factors it considers to identify qualified nominees for directors. Identifying and Evaluating Nominees for Director. In the event that vacancies are anticipated or otherwise arise, the Nominating and Corporate Governance Committee shall consider various potential candidates for directorship. The Nominating and Corporate Governance Committee coordinates with a professional search firm to successfully identify candidates with the requisite qualifications and characteristics, focusing on director candidates with expertise in the payments industry and Latin America markets. Candidates may also come to the attention of the Board through management, current directors, stockholders or other persons. Candidates are evaluated at regular or special meetings of the Nominating and Corporate Governance Committee and may be considered at any point during the year. Stockholder Nominees. The Nominating and Corporate Governance Committee will consider candidates for director recommended by stockholders. If a stockholder wishes to nominate a candidate to be considered for election as a director at the Company s 2019 annual meeting of stockholders, he or she must use the procedures as set forth in the Company s By-Laws. The nomination should generally include the candidate s name, home and business contact information, detailed biographical data, relevant qualifications for membership on our Board, information regarding any relationships between the candidate and us within the last three years, including stockholdings in us, and a written indication by the candidate of his or her willingness to serve, and should be sent to the Nominating and Corporate Governance Committee in care of the Corporate Secretary at: Road 176, Km. 1.3, San Juan, Puerto Rico If a stockholder wishes simply to propose a candidate for consideration as a nominee for any of the Board s committees, the stockholder should submit any pertinent information regarding the candidate to the corresponding committee, care of the Company s Corporate Secretary by mail to this same address. The Nominating and Corporate Governance Committee and the Board of Directors will evaluate recommendations for director nominees submitted by directors, management, professional search firms or stockholders in the same manner, using the criteria stated above. All director nominees must submit a completed form of directors and officers questionnaire, as well as a completed questionnaire to determine independence, financial literacy, financial expertise and risk management experience as part of the nominating process. The process may also include interviews and additional background and reference checks for non-incumbent nominees, at the discretion of the Nominating and Corporate Governance Committee. 14 Evertec, Inc Proxy Statement

23 PROPOSAL 1: ELECTION OF DIRECTORS Recommendation of the Board of Directors THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE COMPANY S DIRECTOR NOMINEES LISTED BELOW. Information about Director Nominees Each of the individuals identified below has been nominated to stand for election for a term that expires at the Company s 2019 annual meeting of stockholders. Each of these individuals has consented to be named as a nominee in this Proxy Statement and to serve as a director until the expiration of his or her respective term and until such nominee s successor has been duly elected or qualified or until the earlier resignation or removal of such nominee. The Nominating and Corporate Governance Committee recommended each of the nominees for selection, and each is currently serving on our Board. There are no family relationships between any director, executive officer or director nominee. As described in more detail in the Certain Relationships and Related Transactions section of this Proxy Statement, as of the Record Date, Popular has nominated Mr. Rivera and Ms. Loubriel as members of our Board pursuant to the terms of our Stockholder Agreement. Ages specified below are as of the Record Date for the Annual Meeting. Should any one or more of the nominees named in this Proxy Statement become unable to serve for any reason, the Board may designate substitute nominees, unless the Board by resolution provides for a lesser number of directors. In this event, the proxy holders will vote for the election of such substitute nominee or nominees. Frank G. D Angelo Age: 72 Director since: September 2013 Chairman of the Board Compensation Committee Information Technology Committee Independent Mr. D Angelo has been Chairman of the Board since February 2014 and a director since September He was the Company s Interim CEO from January 1, 2015 to March 31, Mr. D Angelo is also currently an Operating Partner in Hill Path, a private equity partnership that invests private equity in the public markets. He has 40 years of experience in the financial services industry. From 2012 to 2013, he was Chairman and President of Monitise Americas, Inc., a provider of mobile banking, payments and commerce solutions. From 2009 to 2011, he was Executive Vice President of the Payment Solutions Group at Fidelity National Information Services, Inc. and, before that, Senior EVP of the Payment Solutions Group ( ) and member of the Corporate Risk Management Committee at Metavante Technologies, Inc. until the company s merger with FIS in Mr. D Angelo retired from FIS in Prior to FIS, he was employed by Diebold ( ), where he held several executive management positions such as VP of Service Operations, Head of Product Management, VP Client Services and Software Engineering, and CEO at Diebold, Inc. Mexico ( ), living in Mexico City. From 1969 to 1979, he worked at Burroughs Corporation (now, Unisys Corporation) in software engineering, product management and client service management positions. Mr. D Angelo is a past director and served on the Executive Committee of Contact Solutions, Inc., a provider of voice and mobile customer care solutions, as well as a director of ISF, a provider of system solutions to state and local government agencies. He is a past Chairman of the Electronic Funds Transfer Association and served on the Payments Advisor Counsel of the Federal Reserve Bank of Philadelphia. He is also on the board of directors for Walsh University in Ohio, serves on the Walsh University Executive Committee, is Chairman of the Walsh University Finance and Audit Committee, and a member of its Investment Committee and Technology Committee. Mr. D Angelo is a graduate of Walsh University with a business and management degree, and a United States Air Force veteran. Skills and Expertise: Mr. D Angelo s experience in the financial services industry, as well as in operations and management, provides great value to our Board. Evertec, Inc Proxy Statement 15

24 PROPOSAL 1: ELECTION OF DIRECTORS Morgan M. Schuessler, Jr. Mr. Schuessler joined the Company in April 2015 as our President and Chief Executive Officer. See Biographical Information of our Executive Officers for Mr. Schuessler s biographical information. Skills and Expertise: As a result of Mr. Schuessler s 20 years of experience in the payments industry, he thoroughly understands the Company s main market and has developed management and oversight skills that allow him to make significant contributions to the Board. Age: 47 Director since: April 2015 President and CEO Olga Botero Age: 54 Director since: September 2014 Nominating and Corporate Governance Committee Information Technology Committee (Chair) Independent Ms. Botero is the founder and managing director of C&S Customers and Strategy, an information technology ( IT ) consultancy firm, and has been a Senior Advisor to the Boston Consulting Group since She is the Co-Chair of the Colombian Chapter of WCD Women Corporate Directors Foundation since 2016, and a member of the IT advisory committee of Interbank in Peru. Ms. Botero has more than 25 years of experience in leadership roles in financial services telecommunications and technology sectors globally. From 2006 to 2011, she was Group CIO for Grupo Bancolombia, one of the largest financial groups in Colombia, as well as for all of Latin America. In 2017, Ms. Botero obtained the CERT Certificate in Cybersecurity Oversight, conferred by the NACD Cyber-Risk Oversight Program, the world s first cybersecurity oversight program for corporate directors. Through this program, led by the National Association of Corporate Directors (NACD) and the CERT Division of the Software Engineering Institute (SEI) at Carnegie Mellon University, Ms. Botero completed all the requirements established by the SEI regarding the understanding of cybersecuriy risks and the board s responsibilities in cyber-risk oversight. Ms. Botero has served as a director on several boards, including ACH Colombia, Todo1 Services, Todo1, Multienlace, Tania, Alianza Fiduciaria, Alianza Valores and Intralinks HLA. She has also been a member of several advisory groups, including the Global Billing Association in the UK, SAP s Banking Advisory Council, IBM WebSphere Board of Advisors, Accenture s Global CIO Council Advisory Board, Unisys Global Outsourcing and Infrastructure Services Advisory Council, Cisco s Latin American Executive Council, and SAS Customer Advisory Board. Skills and Expertise: Ms. Botero has deep experience within the IT industry and brings to the Company specific knowledge of payment systems that, combined with her knowledge of and relationships in the Colombian market, is an asset to the Company. 16 Evertec, Inc Proxy Statement

25 PROPOSAL 1: ELECTION OF DIRECTORS Jorge A. Junquera Age: 69 Director since: April 2012 Audit Committee Nominating and Corporate Governance Committee Until his retirement in February 2015, Mr. Junquera was Vice Chairman of the Board of Directors of Popular. Prior to becoming Vice Chairman, he was Chief Financial Officer of Popular and Supervisor of Popular s Financial Management Group, positions he held since From 1999 to 2002, Mr. Junquera was also President of Banco Popular North America. Mr. Junquera was a member of the boards of Banco Popular de Puerto Rico and Banco Popular North America from 2001 until 2013, a member of the board of Centro Financiero BHD in the Dominican Republic from 2001 until 2015 and a member of the board of Popular North America from 1996 until 2015, as well as of various Puerto Rico open-end investment companies from 2010 until He currently serves as a director of Sacred Heart University in Puerto Rico since Skills and Expertise: Mr. Junquera s significant experience managing financial institutions and serving on various boards of directors provides him with unique expertise and valuable perspective to assist the Board. Independent Teresita Loubriel Age: 65 Director since: June 2013 Compensation Committee (Chair) Audit Committee From 1978 until her retirement in 2008, Ms. Loubriel held several positions in Popular and Banco Popular de Puerto Rico including Corporate Controller, General Auditor, Head of Quality Office, Head of the Year 2000 Office and Human Resources Director. When she retired she was Executive Vice President and Executive Officer in charge of Human Resources, Strategic Planning and Corporate Communications. A retired CPA, Ms. Loubriel served as Senior Auditor for PricewaterhouseCoopers LLP from 1974 to She was on the Board of Trustees of Sacred Heart University in Puerto Rico from 2006 to 2013 and was a member of the Executive and Audit Committees. Ms. Loubriel is currently a member of the Board of Directors of Hogar de Niñas de Cupey, a non-profit organization that shelters girls that have been removed from their homes by the Department of the Family due to abuse or neglect of their parents. Skills and Expertise: Ms. Loubriel s extensive knowledge of human resources, compensation, finance and accounting allows her to make significant contributions to the Board. She also provides thoughtful insight regarding the communication needs of the Company. Independent Evertec, Inc Proxy Statement 17

26 PROPOSAL 1: ELECTION OF DIRECTORS Néstor O. Rivera Age: 71 Director since: April 2012 Information Technology Committee Mr. Rivera worked for Banco Popular de Puerto Rico for over 45 years, until his retirement on July 2017, starting his career in 1970 under the Management Associate Program working for the Human Resources Division in charge of the Compensation and Salary Administration Department, and ultimately being appointed as the Director of Human Resources in During his tenure, he has been responsible for various divisions, such as Bank Operations for both Banco Popular de Puerto Rico and Banco Popular North America, and Asset Protection and Real Estate. Mr. Rivera is credited with establishing the Risk and Fraud Control Division in 2009 to prevent and minimize debit and credit card fraud, and the Technology Management Division to centralize all IT requirements and processes after Popular sold a 51% interest in Evertec to AP Carib Holdings, Ltd. Before assuming his former position as Executive Vice President of Retail Banking and Operations, he was Senior Vice President in charge of the Retail Banking Division from 1988 to Mr. Rivera received an MBA in banking from the Interamerican University and, before joining Banco Popular de Puerto Rico, he served in the United States Air Force, Air National Guard and United States Air Force Reserve. Skills and Expertise: Mr. Rivera s experience in sales, marketing, risk and operations has provided him with the knowledge and experience to contribute to the development of the Company s business strategy, which helps the Board in many important areas. Alan H. Schumacher Age: 71 Director since: April 2013 Audit Committee (Chair) Nominating and Corporate Governance Committee Independent Mr. Schumacher has been a member of our Board since April 2013 and served in the position of Interim Lead Independent Director from January 1 to March 31, Mr. Schumacher is currently a director of Bluelinx Holdings, Inc., Bluebird Bus Holding, Inc., Warrior Met Coal, Inc., and Albertsons Companies. He has also served as a director of other companies including Noranda Aluminum Holding Corporation from 2008 to 2016, Equable Ascent Financial, LLC from 2009 to 2012 and Anchor Glass Container, Inc. from 2002 to Mr. Schumacher served on the Federal Accounting Standards Advisory Board from 2002 until He also served on the Board of Quality Distribution Inc. from 2004 to Mr. Schumacher worked for 23 years at American National Can Corporation and American National Can Group, where he served as Executive Vice President and CFO from 1997 until his retirement in 2000, and Vice President, Controller and Chief Accounting Officer from 1988 to Skills and Expertise: As a former CFO and member of the Federal Accounting Standards Advisory Board, Mr. Schumacher brings to our Board substantial expertise in accounting, and the review and preparation of financial statements and internal controls, which he draws upon as our Audit Committee Chairman, while his vast experience in management at various entities has allowed him to make valuable contributions to the Board in its oversight functions. 18 Evertec, Inc Proxy Statement

27 PROPOSAL 1: ELECTION OF DIRECTORS Brian J. Smith Age: 62 Director since: February 2015 Audit Committee Compensation Committee Mr. Smith currently serves as Group President of EMEA (Europe, Middle East & Africa) for The Coca-Cola Company since August 1, Before that, he served as Group President of Latin America (Central America, South America, Mexico and the Caribbean), a position he held since January The Latin America Group represented $4.9 billion in net revenue and operating income of $2.9 billion in He was President of Coca-Cola s Mexico division from October 2008 to January 2013, and President of the Brazil division from August 2002 to October Mr. Smith has also held other strategic and management roles since joining The Coca-Cola Company in 1997, including Latin America Group Manager for Mergers and Acquisitions where he was responsible for bottler and brand transactions in Latin America. Mr. Smith holds a Master of Business Administration from the University of Chicago. Skills and Expertise: Like other members of the Board, Mr. Smith has substantial managerial experience in Latin America. His extensive experience in management makes him a valuable asset to the Company. Independent Thomas W. Swidarski Age: 59 Director since: December 2014 Nominating and Corporate Governance Committee (Chair) Compensation Committee Information Technology Committee Independent Mr. Swidarski s career spans over 35 years in the financial services and payments industries. He currently serves as CEO of The Telos Alliance, a global audio technology company whose products and services help radio and TV stations produce better programming. Mr. Swidarski also serves on the board of another publicly-traded company, Altra Industrial Motion Corp ( Altra Industrial ). Altra Industrial is a leading global designer and manufacturer of quality power transmission and motion control products used in a variety of industrial applications. He is also Chairman of three privately held technology companies, Bancsource, Inc., Paragon, and Asurint. From 2006 to 2013, Mr. Swidarski was Chief Executive Officer and President of Diebold, Inc., a $3 billion global leader in providing integrated self-service transaction (ATMs) and security systems to the financial, commercial and retail markets in 100 countries. Prior to becoming CEO and President, Mr. Swidarski was Chief Operating Officer and President of Diebold, and served in various other senior strategic development and marketing capacities at Diebold since joining the company in Before joining Diebold, he worked in the banking industry for 16 years, ultimately serving as Vice President of alternative delivery systems for AmeriTrust Bank and Chief Marketing Officer of PNC Bank. Mr. Swidarski is involved in many non-profit organizations and is a trustee for the University of Dayton. Skills and Expertise: Mr. Swidarski is a seasoned senior executive with deep industry knowledge. Having served as CEO and President of Diebold, he brings significant international operating and management experience, which adds to the success and growth of the Company. Evertec, Inc Proxy Statement 19

28 PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Overview The Audit Committee and the Board intend to appoint Deloitte & Touche LLP ( Deloitte ) as the Company s independent registered public account firm for the fiscal year ending December 31, During the fiscal year ended December 31, 2017, Deloitte served as the independent public auditor of the Company and also provided certain audit-related services. Neither the Charter nor our By-Laws require that the stockholders ratify the appointment of Deloitte as the Company s independent auditors. However, the Board is submitting the selection of Deloitte to the Company s stockholders for ratification as a matter of good corporate governance and practice. If the stockholders do not ratify the appointment, the Audit Committee and the Board will reconsider whether or not to appoint Deloitte, but may nonetheless appoint such independent auditors. Even if the appointment is ratified, the Audit Committee and the Board, in their discretion, may change the appointment at any time during the year if they determine that such change would be in the best interests of the Company and its stockholders. The audit reports of Deloitte on the Company s consolidated financial statements for the fiscal year ended December 31, 2017 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. Deloitte audited the consolidated financial statements as of and for the year ended December 31, 2017, included in the Company s Annual Report on Form 10-K and, as part of the audit, has issued a report, included as part of Item 8 of the Company s Annual Report on Form 10-K, on the effectiveness of our internal control over financial reporting as of December 31, Representatives of Deloitte are expected to attend the Annual Meeting. They will have the opportunity to make a statement at the Annual Meeting, if they so desire, and will be available to respond to any appropriate questions brought to their attention by stockholders. 20 Evertec, Inc Proxy Statement

29 PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Report of the Audit Committee In the performance of its oversight function, the Audit Committee has considered and discussed our audited consolidated financial statements for the fiscal year ended December 31, 2017 including critical accounting policies, reasonableness of significant estimates and judgment and financial statements disclosures with management and Deloitte, our independent registered public accounting firm for the 2017 fiscal year. The Audit Committee has also discussed with the independent registered public accounting firm the matters required to be discussed by AU Section 380 (Statement on Auditing Standards No. 114), Communications with those Charged with Governance (SAS 114), and the Public Company Accounting Oversight Board Standard No. 16 regarding Communication with Audit Committee. In addition, the Audit Committee has received the written disclosures and the letter from Deloitte required by applicable requirements of the Public Accounting Oversight Board regarding the independent registered public accounting firm s communications with the Audit Committee concerning independence, and has discussed with Deloitte its independence. The Audit Committee has also considered whether the provision of non-audit services by the independent registered public accounting firm to us is compatible with maintaining the auditors independence. The Audit Committee has concluded that the independent registered public accounting firm is independent from the Company and its Management. The members of the Audit Committee are not engaged professionally in the practice of auditing or accounting and are not employees of the Company. The Company s management is responsible for its accounting, financial management and internal controls. As such, it is not the duty or responsibility of the Audit Committee or its members to conduct auditing or accounting reviews, or establish procedures to set auditor independence standards. Based on the Audit Committee s consideration of the audited consolidated financial statements and the discussions referred to above with management and the independent registered public accounting firm, and subject to the limitations of the role and responsibilities of the Audit Committee set forth in the charter and those discussed above, the Audit Committee recommended to the Board that our audited consolidated financial statements be included in our Annual Report on Form 10-K for filing with the SEC. No portion of this Audit Committee Report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, through any general statement incorporating by reference in its entirety the Proxy Statement in which this report appears, except to the extent that the Company specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed to be filed under either the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. THE AUDIT COMMITTEE Alan H. Schumacher, Chairman Jorge A. Junquera Teresita Loubriel Brian J. Smith Evertec, Inc Proxy Statement 21

30 PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Principal Accounting Fees and Services The following table presents the aggregated fees billed for professional services provided by Deloitte, as the Company s independent registered public accounting firm, for the fiscal year ending 2017 and 2016, as indicated below. Year ended December 31, Deloitte Audit Fees $1,854,643 $1,554,559 Audit-Related Fees $ 932,686 $ 879,091 All Other Fees $ 0 $ Total $2,787,329 $2,433,650 Audit Fees. This category includes fees and expenses related to the audit of our annual financial statements and the effectiveness of our internal controls over financial reporting. This category also includes the review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent auditors in connection with regulatory filings or engagements, consultations provided on audit and accounting matters that arose during, or as a result of, the audits or the reviews of interim financial statements, reviews of offering documents and registration statements for debt and issuance of related comfort letters, reviews of acquisition and integration accounting in connection with reviews of business combinations, review of required regulatory filings of financial statements of business acquired, additional audit work necessary for acquired businesses, and the preparation of any written communications on internal control matters. Audit-Related Fees. This category consists of assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under Audit Fees. All Other Fees. This category consists of fees for services other than fees for the services listed in the other categories. Pre-Approval Policies. Pursuant to the rules and regulations of the SEC, before the Company s independent public accountant is engaged to render audit or non-audit services, the engagement must be approved by the Company s Audit Committee or entered into pursuant to the committee s pre-approval policies and procedures. The policy granting pre-approval to certain specific audit and audit-related services and specifying the procedures for pre-approving other services is set forth in the Amended and Restated Charter of the Audit Committee. Recommendation of the Board of Directors THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR Evertec, Inc Proxy Statement

31 BIOGRAPHICAL INFORMATION OF OUR EXECUTIVE OFFICERS Executive Officers The following contains biographical information about the Company s executive officers. Ages are as of the Record Date for the Annual Meeting. Morgan M. Schuessler, Jr. President & CEO President & CEO since April 2015 Age 47 Peter J.S. Smith Executive Vice President and Chief Financial Officer Chief Financial Officer ( CFO ) and Treasurer since 2015 Age 50 Mr. Schuessler, Jr. has over 20 years of payment industry leadership experience. He has served as President of International for Global Payments Inc., one of the world s leading payment processing providers, overseeing the company s businesses outside of the Americas since The businesses under his leadership spanned 23 countries throughout Europe and Asia, and encompassed more than 40% of the company s employees. From 2008 to 2012, Mr. Schuessler served as Global Payment s Executive Vice President and Chief Administrative Officer with responsibility for the company s global operations, human resources, corporate marketing and communications, real estate services and money transfer business. In this position, he led the implementation of the worldwide credit and risk function, and the creation of the company s first global operations center in Manila, Philippines. Prior to joining Global Payments, Mr. Schuessler served in several leadership positions with American Express, Inc. including Vice President, Global Purchasing Solutions, with responsibility for managing the company s purchasing card business globally. Additionally, he served in various sales, marketing, strategy and product management positions. Mr. Schuessler was a member of Visa s Senior Client Council and the UnionPay International Member Council, the international division of China UnionPay. He holds a bachelor s degree from New York University and an MBA from Emory University s Goizueta Business School where he currently serves on the Executive Committee of the Dean s Advisory Board. As a result of Mr. Schuessler s 20 years of experience in the payments industry, he thoroughly understands the Company s main market and has developed management and oversight skills that allow him to make significant contributions to the Board. Prior to joining the Company, Mr. Smith served as Chief Accounting Officer and Corporate Senior Vice President of Fidelity National Information Services, Inc. from May 2013 to May In this role, Mr. Smith was FIS principal accounting officer responsible for enterprise-wide accounting operations and systems, financial controls and external reporting. From October 2009 to May 2013, Mr. Smith served as Senior Vice President and Segment Controller. In this position, he was responsible for managing the finance and accounting functions for FIS Payments Solutions Group segment. Before joining FIS, Mr. Smith held finance roles of increasing responsibility at Metavante Technologies, Inc. from 2005 to 2009 and served as Segment Chief Financial Officer of the Payments Solutions Group of Metavante Corporation from 2008 to As part of his responsibilities, he teamed up with business partners to successfully acquire, integrate and grow numerous businesses and go public. Prior to joining Metavante, Mr. Smith spent seven years in Silicon Valley and served as the Worldwide Sales Controller of Openwave Systems Inc., beginning in June Before this role, he worked for PricewaterhouseCoopers LLP in its San Jose, CA office. Mr. Smith received his bachelor s degree from the University of Pennsylvania and holds a master s degree in taxation from San Jose State University. He is a Certified Public Accountant. Evertec, Inc Proxy Statement 23

32 BIOGRAPHICAL INFORMATION OF OUR EXECUTIVE OFFICERS Paola Pérez Executive Vice President Human Resources Ms. Pérez joined the Company in 2011 as Director of Internal Audit responsible for the implementation of the Sarbanes-Oxley Program and coordination of the Company s internal audit function, reporting to the Audit Committee of the Board. She obtained her bachelor of science in accounting from Fairfield University in May 2005 and is a Certified Public Accountant since February She worked in Chartis as an External Reporting Manager of the Latin America Region and in PriceWaterHouseCoopers where she worked as a senior auditor. During her time in PriceWaterHouseCoopers she worked with different public clients from the financial services and health care industries. In 2015, she was recognized by Caribbean Business with the 40 Under 40 award. Executive Vice President since February 2018 Age 34 Carlos J. Ramírez Executive Vice President Sales Puerto Rico Executive Vice President since April 2012 Age 56 Luis A. Rodríguez Executive Vice President & General Counsel Legal, Compliance and Corporate Development Mr. Ramírez joined the Company in April 2004 as Head of Business Development. Before joining the Company, Mr. Ramírez worked for 21 years at GM Group, Inc. holding various senior positions in product and sales management, including Systems Engineer from 1983 to 1984, Sales Manager for Multiple Computer Services from 1984 to 1990 and Senior Executive Vice President for the International Division from 1990 to He is a member of the Puerto Rico Chamber of Commerce and the Puerto Rico Sales and Marketing Association. Mr. Ramírez has received numerous commendations including the Teodoro Moscoso Award from the Puerto Rico Chamber of Commerce; the Top Management Award in Sales from the Puerto Rico Sales & Marketing Association; the Service Manager of the Year, Metro Region award from the Puerto Rico Manufacturers Association; and a People to Watch recognition from Caribbean Business in Mr. Ramírez received his Bachelor of Science degree in Computer and Systems Engineering from Rensselaer Polytechnic Institute in New York. Prior to joining the Company in May 2015, Mr. Rodríguez served as Executive Director at J.P. Morgan s Emerging Markets Credit Desk in New York. During his 15 years of professional experience in the Puerto Rico, United States and Latin America markets, Mr. Rodríguez also served as Assistant Secretary for the Department of Economic Development and Commerce of Puerto Rico, Vice President of Deutsche Bank Securities Inc. s Distressed Products Group and Emerging Markets Latin America Credit Trading Group in New York, and as an associate at the law firm Davis Polk & Wardwell in New York. Mr. Rodríguez possesses a Bachelor s degree from the Woodrow Wilson School of Public and International Affairs at Princeton University. He also holds a Juris Doctor from Stanford Law School. Executive Vice President and General Counsel since February 2016 Age Evertec, Inc Proxy Statement

33 BIOGRAPHICAL INFORMATION OF OUR EXECUTIVE OFFICERS Guillermo Rospigliosi Executive Vice President Product, Marketing and Innovation Mr. Rospigliosi has 20 years of experience in the payments, financial services, innovation, and technology sectors and is passionate about the connection of commerce and technology. Mr. Rospigliosi held regional Latin American roles at Visa for 11 years. Previous to joining the Company, he served as Chief Risk Officer for Visa in Latin America and before that he was the Managing Director for Latin America at CyberSource, a Visa subsidiary, where he was responsible for establishing and growing the business. Prior to that, his experience includes working at Citibank in New York and Banco de Crédito in Peru. He graduated from University of Lima with a Bachelor s degree in Business Administration and holds an MBA from the University of Texas in Austin. Executive Vice President since April 2016 Age 44 Philip E. Steurer Executive Vice President and Chief Operating Officer Before joining the Company, Mr. Steurer worked for over 11 years at First Data Corporation, holding various positions, such as Senior Vice President, Latin America and Caribbean from 2003 to 2012, and Vice President and General Manager at PaySys Intl. (a subsidiary of First Data Corporation) from 2001 to Prior to that, his experience includes serving as Unit Manager of Credit Services at Sears Roebuck & Company, Senior Manager of the Card Processing Center of EDS Africa, Ltd., Manager of Contract Administration at Electronic Data Systems, as well as an Assistant Bank Examiner at the Federal Deposit Insurance Corporation. Mr. Steurer holds an MBA in Finance from Indiana University, and a Bachelor of Business Administration degree in Finance from the University of Notre Dame. Executive Vice President and Chief Operating Officer ( COO ) since August 2012 Age 49 Miguel Vizcarrondo Executive Vice President Payment Services Puerto Rico & Caribbean, Business Solutions and Merchant Acquiring Prior to joining the Company, Mr. Vizcarrondo worked in Banco Popular de Puerto Rico for 14 years where he served as Portfolio Manager of the Treasury Division from 1996 to 2000, Vice President of Corporate Banking from 2000 to 2006, and Senior Vice President of Merchant Acquiring Solutions from 2006 until joining the Company in September 2010 as Evertec Group Senior Vice President and Head of Merchant Acquiring. Mr. Vizcarrondo currently serves as a Director of the Puerto Rico Pee Wee Football League and as a member of the Global Payments Innovation Jury. He is a former president of the Puerto Rico Association for Financial Professionals, has served on Visa Latin America Acquirer and Emerging Payments Committees. Mr. Vizcarrondo has received numerous acknowledgements including a 40 Under 40 award from Caribbean Business in 2012 and a People to Watch recognition from Caribbean Business in Mr. Vizcarrondo received his Bachelor of Science degree in Management, with a concentration in Finance, from Tulane University in New Orleans, Louisiana. Executive Vice President since February 2012 Age 44 Evertec, Inc Proxy Statement 25